According to a report by Cornerstone Research, the U.S. Securities and Exchange Commission (SEC) has continued to prioritize cryptocurrency-related enforcement under the leadership of Chair Gary Gensler.
The report, titled “SEC Cryptocurrency Enforcement: 2022 Update,” stated that the SEC filed 30 enforcement proceedings against digital-asset market participants in 2022, a 50% increase from the 20 actions filed in 2021 and the highest number since 2013.
The report revealed that the SEC brought 24 litigation actions in U.S. federal courts and six administrative proceedings in 2022, with the number of litigations remarkably increasing from 14 the previous year. Additionally, the SEC issued two delinquent filing orders, two follow-on actions, and one-stop order by Section 8(d) of the Securities Act.
Simona Mola, the report’s author and a principal at Cornerstone Research, explained that the SEC had increased its focus on cryptocurrency lending and trading platforms as well as decentralized finance platforms.
“As Chair Gensler has noted, the ‘runway is getting shorter’ for crypto intermediaries to register with the SEC. This could lead to more enforcement actions coming from the SEC’s Crypto Assets and Cyber Unit, which recently expanded its workforce to investigate securities law violations in the crypto markets, “ Mola said.
The SEC accused 79 defendants or respondents in cryptocurrency enforcement proceedings in 2022, with 56 (71%) being individuals and 23 (29%) being firms. Under Gensler’s administration, the proportion of enforcement proceedings charging solely persons increased from approximately 20% on average in the 2013-2020 period to 35% in 2021 and 50% in 2022.
Of the 30 total enforcement actions in 2022, 14 involved initial coin offerings (ICOs), and over half (57%) of these ICO-related actions included a fraud allegation. In 2022, the SEC also filed first-of-their-kind accusations in the cryptocurrency field for insider trading and market manipulation.
Since its initial cryptocurrency-related enforcement action in 2013, the SEC has brought 127 enforcement actions and levied nearly $2.61 billion in total monetary penalties, including $242 million in 2022 settlements.
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